The diplomatic downgrade and a freeze on military ties is linked to Israel's refusal to apologize for the May 2010 killing of nine Turkish activists in a pro-Palestinian flotilla.

Reporting from Jerusalem — Israel's souring relations with a onetime ally deteriorated further Friday as Turkey announced that it would formally expel Israel's ambassador and suspend military agreements between the two countries.

The downgrade in diplomatic ties comes after Israel consistently refused to apologize for the May 2010 killing of nine Turkish activists on board a boat in a pro-Palestinian flotilla trying to break Israel's naval blockade of the Gaza Strip. After the incident, Turkey recalled its own ambassador to Israel in protest.

"The time has come for Israel to pay for its stance that sees itself as above international law and human conscience," Turkish Foreign Minister Ahmet Davutoglu told reporters Friday in Ankara, the Turkish capital. "The first and foremost result is that Israel is going to be devoid of Turkey's friendship."

But he added, "Our aim here is not to hurt our friendship but to return this friendship to its right track."

Israeli officials said Friday that they hoped to restore ties with Turkey but reiterated that they would not apologize.

Turkey's announcement was pegged to the formal submission Friday of a United Nations commission's report on its investigation of the flotilla incident. The commission concluded that Israel's blockade was a legitimate means to prevent weapons from entering Gaza but that its troops had used "excessive and unreasonable" force in seizing control of the Mavi Marmara, one of the boats.

Israeli officials portrayed the U.N. findings as a vindication of their blockade, while Turkey complained that the report is not critical enough of Israel. The report's release had been delayed two months as diplomats attempted to reconcile the two nations.

The diplomatic standoff between Turkey and Israel came despite frantic American efforts over the last few months to mediate between the two key regional U.S. allies. Under a proposed compromise, Israel would have offered a limited apology and paid compensation to the victims' families, while Turkey would have agreed to restore ties and not pursue lawsuits against Israel over the incident.

But last month, Israeli Prime Minister Benjamin Netanyahu signaled that he would not apologize. Hard-liners in his coalition said an apology would be viewed as a sign of weakness. Israeli officials also complained that Turkey was seeking additional concessions.

Among other things, Turkey wanted Israel to halt its blockade, said an Israeli government official who requested anonymity because he wasn't authorized to speak on the matter publicly. "An apology would not have been enough."

Critics said both governments appear more concerned about national pride and looking tough in the eyes of their citizens.

"It's a problem on both sides because in both countries, it's a matter of public opinion," said Gallia Lindenstrauss, a Turkey expert at the Institute for National Security Studies in Tel Aviv. "Netanyahu has a hard time making unpopular decisions."

Though the friendship between Turkey and Israel has been troubled for several years, Turkey is threatening to take hostilities to a new level. Officials have hinted that they might impose economic sanctions, file legal actions against Israel in international courts and assist Palestinians in their upcoming U.N. bid for statehood recognition.

Turkish Prime Minister Recep Tayyip Erdogan also has threatened to make an official visit to Hamas-controlled Gaza, affording legitimacy to an enclave that Israel has been working to isolate.

Tensions with Turkey come as Israel is facing growing isolation in the region. Last week, Egypt's military-led interim government briefly threatened to recall its ambassador to Israel after three Egyptian soldiers were killed during an Israeli cross-border incursion. In that case, Israel quickly apologized.

Some Israeli officials said they were optimistic that relations with Turkey would be restored over time, after passions on both sides cool down.

"This is damaging for the interests of both countries," said the Israeli government official. "There is a natural interest to restore relations and our hope is that a way will be found. We think the door is not completely closed."